The Convergence of Specialty and Mass

How Toy Trends Affect the Retail Landscape

Like everyone else, I made New Year’s resolutions for 2019. Some are personal, such as learning how to say “thank you” in every language, and some are business related, such as not using the words “mass” or “specialty” when describing a product or brand.

The industry changed so much over the past 36 months—and especially in the last six—that those terms no longer tell the full story of an item. I believe it started back in November 2013 with the release of Disney Frozen. A product frenzy emerged due to everyone, including Disney, under-betting on the movie and its characters. The demand was through the roof, and sharp retailers—no matter classification—sourced licensed products often for the first time. It blurred channel lines and gave independent retailers a taste of the velocity of selling the right licensed goods at the right time.

Flash-forward to 2018, the first Christmas without Toys “R” Us, and when L.O.L. Surprise! accounted for seven of the top 10 toys in the entire toy business, according to The NPD Group. Manufacturers such as Moose Toys, Spin Master, MGA Entertainment through KidFocus, and WowWee all had domestic distribution options that, for the first time, gave all retailers—big and small—accessibility to the top brands.

This created a unique mix of products that consumers increasingly sought, including items that were highly specialized and educational. Merchants balanced exciting TV brands with classic and traditional toys for a mix never before seen in the industry. As a result, retailers curated an offering that truly represented them and reflected their values, instead of being held to traditional channel distribution lines of the past. From every retailer I spoke with this fourth quarter, that mix was driving major excitement and dollars to the bottom line.

Besides MGA Entertainment, the only other toy company in the top 10 list that had cross-channel success and posted year-over-year growth was Funko. Before diving deep into the product, look up the consumer event that the company puts on at Comic-Con International: San Diego, called “Funko Fundays.” This celebration of fandom and the company’s consumer is what separates it from any other figure company in our industry. Funko offers the widest—and sometimes most obscure—range of licensed product options to retailers in every sector. It sells licensed products from video games, such as Overwatch; TV shows, such as Rick & Morty; and movies, such as Harry Potter. There are even surprising licenses, such as Bob Ross; ones that fill consumers with nostalgia, such as the Golden Girls; or products for remembrance, with idols like Prince. Fan toys are another opportunity for independent retailers to tell their stories with products that feature beloved characters and attract new consumers.

Companies like Funko resonate with consumers because they speak to the kid-at- heart-phenomena. The average age of a first-time mother in the 1970s was 21 years old, and the average age of a first-time mother in the 2010s is 27 years old. That’s six years of more income, time, and embracing the innocence and playfulness of being a kid­— and intermingling it with our consumerist patterns. The millennial is different from the previous generation that abandoned its interest to work in a factory or white collar office—one that had, could, and wanted to grow up faster.

Instead, these kidults still love video games, collectibles, and comic books, and find shopping at a neighborhood retailer fun and rewarding. They also buy all their necessities on Amazon and are fortunate enough to receive the byproduct of purchasing items off of the retail giant—time. They have more time to spend on fun things, and going to a toy store is inherently fun—so mass and specialty retailers alike should take advantage.

Finally, I see that the arts and crafts supercategory and automation in society connect. Call me a bit of a homer, but a quote from Mark Cuban from 2017 still stands out to me. When asked about what automation will do to society in relationship to unemployment and job training, he said, “I personally think there’s going to be a greater demand in 10 years for liberal arts majors.” Last year, the supercategory slightly rose less than 5 percent, which validates the need for all retailers to champion this category. The tactile trend proved that kids are over-digitized, and now retailers should embrace that creative development aligns with the future needs of companies and entrepreneurial opportunities. Let’s promote it and together find innovation.

Trends today spread like wildfire and can become global in a matter of days, not months. With that in mind, my recommendation is simple: Try it! If you hear that something is trending from a trusted source, find a way to bring it into your store as fast as possible. The upside to being right heavily outweighs the financial loss of being wrong. A creative director friend once told me that trends are like the weather. At first I thought it referred to trends changing every day, but the more I research trends, the more I understand that it’s really about not getting caught in the rain without an umbrella.

Steve Starobinsky is a toy industry veteran. He started working in the toy business in high school for Funrise Toys in Los Angeles, and worked his way up from the warehouse to sales and marketing. Steve has been with Diverse Marketing, a leading toy and trend marketing firm in Dallas, for the past 10 years. He serves as chief marketing officer. Steve also publishes a trend blog based on his travels around the world called Diverse Insights.

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